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Can Preferential Trade Agreements Address Climate Change?

Jean-Frédéric Morin, Université Laval

Sikina Jinnah, University of California, Santa Cruz

Although preferential trade agreements (PTAs) are increasingly used to address

environmental issues, they are an underutilized tool for addressing climate change. PTAs

allow two or more countries to offer preferential market access on a reciprocal basis through

tariff reductions. As World Trade Organization (WTO) negotiations continue to stall, many

countries are looking to PTAs, among smaller groups of countries, to push international trade

policy forward. Some PTAs are regional such as the recently agreed United States-Canada-

Mexico Agreement (USCAM). Others reflect strategic economic relationships such as the

United States–South Korea Free Trade Agreement or the United States–Israel Free Trade

Agreement. Many recently negotiated PTAs mirror the WTO’s existing framework policies,

while also increasingly providing reciprocal preferential treatment as well as extending

policies beyond their core trade liberalizing function. Indeed, PTAs also serve as instruments

of regional integration, vehicles for strategic market access and security—and increasingly—

instruments for environmental protection and thus potential climate change action.

Environmental provisions in PTAs have become more far-reaching over time. Early

PTAs merely replicated the WTO’s environmental provisions. Recent PTAs typically include

a full-length chapter entirely devoted to environmental protection, with precise and

enforceable obligations on various environmental issue areas.1 PTAs have already made

significant contributions to biodiversity governance. For example, the United States-Peru

PTA catalyzed the implementation of mahogany-related provisions of the Convention on

International Trade in Endangered Species (CITES) in Peru. This effort resulted in the re-

categorization of Peru into the highest CITES compliance category.2 Likewise, some recent

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PTAs include provisions on genetic resources and the protection of traditional ecological

knowledge that go well beyond the 2010 Nagoya Protocol.3 Although it is yet premature to

fully understand the environmental impact of these PTA environmental provisions, recent

studies have suggested that PTAs do play a role in articulating new environmental norms and

diffusing environmental policies across borders.4 With multilateral climate negotiations

delivering less than scientists say we need to avoid dangerous anthropogenic impacts of

climate change, PTAs could play an important role in the emerging polycentric landscape of

climate change governance. Just as some PTAs have reached beyond the scope of multilateral

biodiversity agreements, one can similarly imagine a PTA with mitigation and adaptation

commitments that go beyond the Paris Agreement on climate change, which was agreed to by

the parties to the United Nations Framework Convention on Climate Change in 2015.

The potential contribution of PTAs to climate change governance rests on four

distinctive features of trade negotiations. First, rather than bringing several countries together

around a relatively integrated issue area, as multilateral environmental agreements (MEAs)

do, PTA negotiations involve a limited number of partners addressing a multitude of different

issues. This context fosters bargaining and the conclusion of new agreements. Second, PTAs

are based on direct reciprocity, and thus in principle open the door to retaliation through

sanction-based dispute settlement should states violate their climate change-related

provisions. Some PTAs’ dispute settlement mechanisms, particularly those contained in

recent U.S. agreements, already offer stronger incentives, such as sanction-based dispute

settlements, to comply with agreed commitments than MEAs do, which typically have

weaker compliance mechanisms.5 Third, PTAs offer opportunities for policy

experimentation, as several new PTAs are negotiated every year, with diversity in types and

membership. In this way, they act as institutional laboratories to design and test climate

change provisions at a limited scale and among like-minded countries. Fourth, PTAs are

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uniquely positioned to address trade-related aspects of mitigation, such as the export of low-

emission technologies, border-tax adjustments on polluting production processes, fossil fuel

subsidies, and trade in carbon credits. These four features of trade negotiations led a number

of analysts to argue that PTAs can potentially contribute to climate change governance.6

However, this is the first study to assess the actual regulatory contribution of the full

landscape of PTAs to global climate change governance.

Our assessment focuses on the quality and quantity of climate change provisions

included across all PTAs. We consider a provision “climate-related” when it directly

addresses climate change. It might not explicitly include the words “climate change,” but it

should address the mitigation of greenhouse gas emissions or adaptation to climate change.

For example, as we explain in more detail below, some energy efficiency provisions do not

mention climate change explicitly, but nonetheless could have direct effects on mitigation of

greenhouse gases. The wide variety of PTA provisions that address environmental protection

more generally, however, are not considered “climate-related” for the purposes of this paper.

For example, if a PTA requires that all countries implement MEAs to which they are party, it

would be not be captured in our definition of “climate-related,” even though it could require,

for example, implementation of the Paris Agreement if both PTA parties are also party to the

Paris Agreement.

To be clear, we do not aim to explain why certain countries include climate-related

provisions in their PTAs while others do not. Likewise, we do not assess the impact of these

provisions in addressing climate change through, for example, resulting emission reductions.7

We do not assert a causal connection here. Rather, our analysis assesses the regulatory

contribution that PTAs make to global climate change governance by manually coding the

climate-related provisions contained in 688 PTAs signed between 1947 and 2016. We

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identified these climate-related provisions in the Trade and Environment Database

(TREND).8

We assess PTAs’ regulatory contribution to climate change along four interacting

dimensions: innovation, legalization, replication, and distribution. These dimensions are

original to this study and were selected to examine climate provisions’ scope and diversity

(innovation), their legal strength (legalization), their relative presence in the overall PTA

population (replication), and the type of countries that have endorsed them (distribution). For

PTAs to significantly contribute to the regulation of climate change governance, they need to

include comprehensive climate provisions, be highly enforceable, quantitatively numerous,

and cover countries that qualitatively matter the most for climate change governance.

Centrally, we find a high degree of regulatory innovation in climate provisions in the

PTAs included in our sample. These provisions do not simply echo those under the UNFCCC

umbrella, but, in some cases, are more specific and more enforceable than the Kyoto Protocol

and the Paris Agreement. We argue here, however, that these regulatory innovations make a

weak contribution to broader climate change governance because they remain weakly

“legalized,” failing to replicate broadly in the global trade system, and were not adopted by

the largest greenhouse gas (GHG) emitters. Despite the inclusion of innovative climate

provisions in several PTAs, their weak design and limited replications position them as some

of the feeblest environmental provisions within PTAs globally.

In the next section, we present the regulatory climate innovations that we find in

PTAs, and group them into six categories. We then argue that, despite the wide variety of

these climate provisions, climate-related provisions remain weak because they are poorly

legalized. We then argue that climate change provisions have failed to replicate across PTAs,

especially when compared with replication trends for other environmental issues across

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PTAs. Finally, we argue that climate-related provisions are further weakened by their lack of

uptake by large GHG emitters.

Innovation

PTAs tend to be highly standardized. New trade agreements often replicate provisions from

earlier agreements.9 In some instances, however, they introduce novelties not present in any

previous agreements. We call these unprecedented provisions “regulatory innovations.”10 As

innovating can be costly and risky due to transaction costs and unintended consequences,

tracking such innovations not only reveals new governance forms, but also where and when

negotiators were particularly committed to tackle this problem. We identify below six

categories of PTA regulatory innovations that directly address climate change, and some

other regulatory innovations that are not climate-related provisions per se, but might

contribute indirectly to climate change governance.

Renewable Energy and Energy Efficiency

The most common climate-related provisions in PTAs address renewable energy or energy

efficiency — with 138 such provisions in PTAs adopted by China, Japan, India, Korea,

Mexico, the United States, and the European Union (EU). Energy-related provisions also

constitute some of the oldest environmental provisions in PTAs. Indeed, as early as 1979, the

Lomé II convention, between Europe and the ACP (African, Caribbean and Pacific)

countries, promoted solar, geothermal, wind, and hydroelectric technologies. Many countries

subsequently also included provisions on research, cooperation, assistance, project

development, and the exchange of information on renewable energy and energy efficiency.

The 2014 agreement between Australia and Korea, for example, calls on parties to organize

joint activities, to exchange views on policy, and to enhance scientific exchange on “energy

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efficiency measures and measures relating to climate change.”11 A 2011 agreement between

Korea and Peru goes even further by including a provision “…encouraging public and private

institutions related to small and medium-sized enterprises to cooperate in […] renewable

energy, and other subjects of mutual interest.”12

Cooperation on Climate Change Governance

Provisions related to cooperation on climate change governance are relatively prolific. Such

provisions have been included in 38 PTAs since before the international community agreed

on the UNFCCC. In 1991, for example, the EU concluded agreements with Poland and

Hungary, which required cooperation on climate change matters by encouraging dialogue on

the issue between trading partners.13 Some PTAs are more specific and ask parties to

cooperate in the development of coordinated measures on climate change issues. Recently,

some PTAs incorporated provisions that required states to cooperate in “trade-related aspects

of international climate change regimes.”14 These “trade-related aspects” may potentially

include the use of protectionist measures to assist domestic renewable energy producers (e.g.

subsidies), or to level the playing field with countries that do not attempt to reduce their GHG

emissions (e.g. border tax adjustments).

Reduction of GHG Emissions

Thirty-one PTAs directly address the reduction of GHG emissions. Many of them touch on

mitigation vaguely by, for example, promoting general cooperation on the issue. The

agreement between the EU and South Africa invites parties to collaborate on “issues

surrounding the reduction of greenhouse gas emissions.”15 The more recent agreement

between the EU and Central America is slightly more specific, stating that “cooperation shall

in particular address […] the strengthening of carbon market mechanisms.”16 Other

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agreements, including the Indonesia-Japan Economic Partnership Agreement, refer directly to

the Kyoto Protocol’s Clean Development Mechanism.17 Some PTAs promote trade in

environmental goods and services specifically related to GHG emissions. The agreement

between the EU and Georgia provides that “parties shall strive to facilitate the removal of

obstacles to trade or investment concerning goods and services of particular relevance to

climate change mitigation […].”18 This agreement also states that cooperation between the

EU and Georgia shall aim at “promoting measures at international level […] in the areas of

[…] research, development, demonstration, deployment and diffusion of safe and sustainable

low carbon […] technologies.”19 Other PTAs are far more specific. A 2012 agreement

between Australia and Malaysia, for example, details requirements related to the transfer of

carbon capture capacities between the two countries.20

Adaptation to Climate Change

Climate change adaptation provisions appear less frequently in PTAs than do climate change

mitigation provisions. Only 14 PTAs include a provision directly related to adaptation. Most

of these 14 PTAs vaguely call for greater cooperation in the area of adaptation and the

adoption of measures that promote climate change adaptation. For example, the agreement

between Korea and Peru states that each party “shall adopt policies and measures […] for

evaluating the vulnerability and adaptation to climate change.”21 The agreement between

Moldova and the EU requires parties to cooperate on “adaptation to climate change” and the

development of “adaptation technologies.”22 Other PTAs address the adverse effects of

climate change in specific sectors like forests, fisheries, and agriculture. Agricultural

adaptation is an area where PTAs could facilitate particularly important action on climate

change governance due to the agricultural sector’s economic centrality and high climate

vulnerability in many developing countries. Several agreements thus include agricultural

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adaptation provisions. For example, the agreement between China and Costa Rica calls on

parties to “promote effective risk management in the agribusiness chains aiming to

incorporate measures for adaptation [to] climate change.”23 The agreement between Korea

and Australia similarly highlights the importance of agricultural adaptation and calls on

parties “to promote cooperative activities in […] climate change adaptation [...]” in that

sector.24

Ratification or Implementation of Climate Agreements

Thirteen PTAs require their parties to ratify or implement a specific climate agreement. In

1993, the Common Market for Eastern and Southern Africa (COMESA) was the first PTA to

provide that its parties must accede to the UNFCCC. At the time, 17 COMESA countries had

not yet ratified the UNFCCC but they all did so in the months following their signature of

COMESA. However, it was more than 10 years after the adoption of the Kyoto Protocol in

1997 before there was reference to the Protocol in a PTA. The first was the EU-Montenegro

agreement, which provides that “special attention shall be paid to the ratification and the

implementation of the Kyoto Protocol.”25

Some PTAs give an important status to multilateral climate change agreements by

providing that “nothing in this Agreement shall limit the right of a Party to adopt or maintain

measures to implement [these] agreements […].”26 This provision would support an

interpretation of the trade agreement favorable to the Kyoto Protocol in case of legal

incompatibility. However, the agreement also makes clear that measures to implement MEAs

“shall not be applied in a manner which would constitute a means of arbitrary or unjustifiable

discrimination between the Parties or a disguised restriction on trade.”27 As such, these

climate provisions are typically weak and their compatibility with trade law remains murky in

the event of any future conflict.

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Harmonization of Climate Regulation

Only two PTAs, both signed by the EU, require harmonization of climate change regulation

across parties. The EU typically introduces harmonization provisions into its PTAs with

countries seeking accession. Recently, the EU has also included references to harmonization

of legislation related to climate change. For example, the EU’s agreements with Ukraine and

Moldova both provide that the latter countries shall “gradually approximate [their] legislation

to […] Directive 2003/87/EC, establishing a scheme for greenhouse gas emission allowance

trading within the Community […]”.28

Provisions Indirectly Related to Climate Change

Several PTAs include environmental provisions that are not “climate-related provisions” as

they do not specifically relate to climate change but could indirectly be useful in addressing

it. Many of these provisions are more common than the ones addressing climate change

directly. For example, one of the most frequent environmental provisions is an exception to

trade commitments for the conservation of natural resources. This exception arguably could

justify trade-restrictive measures that aim at conserving the global atmosphere. Several dozen

PTAs also include provisions providing that the level of environmental protection should not

be weakened to attract trade or investments. While not addressing climate change directly,

these environmental provisions may provide legal justification for cooperation on climate

change matters under the auspices of these PTAs.

Provisions related to air pollution are particularly relevant to climate change because

air pollution often co-varies with GHGs emissions, and can therefore be used to indirectly

mitigate GHG emissions. We found 46 PTAs with such provisions on air pollution and

vehicle emissions. In several of these PTAs, states agree to participate in joint work programs

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or to coordinate their strategies (e.g. COMESA 1993). Some agreements also reiterate

existing provisions from specific bilateral agreements addressing air pollution (e.g. China-

Korea in 2015, art. 16(7)). Recent European agreements are perhaps the most related and

precise, as they regularly provide for specific vehicle emissions standards (e.g. EU-

Montenegro 2007).

Another category of provisions indirectly related to climate change concerns is natural

disaster-related provisions. Such provisions will become more important, as the frequency

and intensity of climate change-induced disasters will likely increase. The Treaty of Rome

(1957) was the first to introduce a provision facilitating assistance to other members in case

of a natural disaster. It provides exceptions to general trade principles, especially for the

awarding of contracts to facilitate rapid response efforts. Other PTAs create financial

mechanisms to facilitate and accelerate the distribution of aid (e.g. Yaoundé I, 1963, art. 39).

Some of them also provide rules governing the distribution of aid in the case of natural

disasters and addressing delays in payments and level of contributions (e.g. Lomé III, 1984,

art. 203.8). Other PTAs include detailed provisions on cooperation to reduce the vulnerability

of Parties to natural disasters, including by building research, monitoring, early-warning,

prevention, rehabilitation and reconstruction capabilities (e.g. China-Costa Rica, 2010, art.

124). Some PTAs even include provisions regarding assistance to third countries, such as the

European Treaty of Lisbon.29

Finally, two PTAs reiterate a core principle of the global climate change regime,

common but differentiated responsibilities (CBDR), which seeks, in part, to guide the fair

distribution of emission reduction responsibility between countries. Although antithetical to

the global trade regime’s central premise of non-discrimination, two recent European

agreements (EU-Colombia-Peru and EU-Central America) included explicit references to

CBDR.

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In sum, we find an impressive degree of innovation related to climate change across

the 688 PTAs we analyzed, with eight distinct categories of policy innovation in this area.

Innovations related to energy efficiency and renewable energy are particularly prolific, but

we also find several other less utilized but nonetheless important innovations related to GHG

mitigation and, to a lesser extent, adaptation. Finally, we identify several other provisions that

do not reference climate change specifically, but have indirect climate relevance, for example

as related to air pollution. These indirect provisions may provide states with the latitude to

innovate further, through PTA implementation, if they choose to interpret these provisions as

relevant to climate change.

Legalization

To complement our analysis of the contribution of PTA climate provisions to climate change

governance, we measure the legalization of these provisions. Legalization is an important

metric because it reflects the strength of climate change governance through PTAs. We

define legalization along three dimensions: obligation, precision, and delegation.30 Obligation

refers to the strength of the commitment that states make. Precision limits parties’ discretion

by narrowing the possible interpretations of a rule. Delegation is related to the contribution of

external actors, including judicators, in implementation and enforcement. If all three

dimensions are strong, we classify the PTA as highly legalized. At the other end, low

legalization happens when obligation, precision, and delegation are weak. Between these two

extremes, we identify several moderate degrees of legalization.

Based on these definitions, we have identified specific indicators to evaluate the

degree of obligation, precision, and delegation of PTAs’ climate change provisions (see

Table 8.1). We measured the level of obligation along a six-degree continuum, ranging from

an explicit negation of intent to be legally bound (low legalization) to a legally binding

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commitment (high legalization). A mere recommendation to consider issues related to

climate change adaptation would receive the weakest degree of obligation. In contrast, firm

commitments that use terms like “shall” or “must” denote a higher degree of obligation. We

classified the degree of precision into four categories. General references, the weakest degree

of precision, include the mere acknowledgement of the existence of the UNFCCC. The most

precise provisions are those that provide for a specific target, such as the commitment to

ratify a given MEA before a certain date. To assess the degree of delegation, we checked

whether PTAs that include at least one climate change provision also provide for a judicial

mechanism to settle disputes on that provision. We looked more specifically for an

independent and accessible court or arbitration mechanism, with an automatic right to action

that renders legally binding and enforceable decisions. We coded each dimension from 0 (the

least legalized) to 1 (the most legalized). When PTAs included several provisions on climate

change, we considered only the highest value reached by any provisions of the agreement, so

that we do not penalize wordy agreements with long preambles.

Table 8.1: Coding legalization

Obligation Precision Delegation Least legalized (0)

0.0. Explicitly not binding 0.2. Mere recognition 0.4. Optional commitment 0.6. Hortatory commitment 0.8. Implicit commitment 1.0 Binding commitment

0.0. General reference 0.3. Discretional measure 0.6. Detailed measure 1.0 Specific target

0.0 Political bargaining 1.0 Judicial

mechanism

Most legalized (1)

Table 8.2 presents the results of our analysis. We find that several climate change

provisions have legally binding language. Sixty-four percent of all PTAs with climate-related

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provisions have at least one provision that is highly legalized as measured through degree of

obligation. These climate provisions are rarely precise, however, with only 10 percent

denoting specific targets. Further, reflecting low levels of precision, more than 38 percent of

PTAs with climate provisions merely acknowledge the climate change problem. For example,

the clause stating that “The Parties shall develop and strengthen their cooperation to combat

climate change”31 scores high in obligation, because it states that Parties shall do this, but low

in precision, because the reference is vague and lacks a specific target or measure. Finally,

the level of delegation is very low. Seventy percent of PTAs with climate-related provisions

do not provide for a third party to settle disputes on these provisions. For those that have such

mechanisms, few provide for sanctions or remedies in case of violation. For example, the

China-Korea agreement (2015) only authorizes parties to request for consultations if an

environmental dispute arises.32 As reflected in many PTAs, there is a double standard with

stronger enforcement mechanisms for trade commitments than for environmental ones.

Table 8.2: Legalization of PTAs’ climate provisions

Median Mode Obligation Binding commitment Binding commitment Precision Discretionary measures General reference Delegation No dispute settlement mechanism No dispute settlement mechanism

Although the level of legal reinforcement remains low across two of our three

metrics, it has increased significantly since the 1990s. In the 1990s, the few agreements that

included climate change provisions used language that was highly imprecise and poorly

enforceable. For instance, the 1992 Framework Agreement on Enhancing Association of

Southeast Asian Nation (ASEAN) Economic Cooperation has merely a vague clause calling

on Parties to cooperate on energy efficiency.33 In the beginning of the 21st century, PTA

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provisions on climate change became more precise. A note to the 2011 agreement between

Korea and United States, for example, is particularly precise in providing that:

“[…] from 2012 through 2015, a manufacturer that sold up to 4500 motor vehicles in

the territory of Korea in calendar year 2009 shall be deemed to comply with the target

level set forth in the regulations if either the average fuel economy or the average CO2

emissions level for the vehicles the manufacturer sold in the territory of Korea during

the relevant calendar year meets a target level that is 19 percent more lenient than the

relevant target level provided in the regulation that would otherwise be applicable to

that manufacturer.”34

We also see variation across countries in the level of legalization reflected in their

PTAs. European agreements are characterized by a higher degree of legalization than

average. They are highly binding and moderately precise.35 However, they favor dispute

settlement by consultation, although arbitration is also available in some recent agreements.

In contrast, especially in recent agreements, the United States tends to include dispute

settlement mechanisms that include legally binding decisions and sanction-based

enforcement provisions. The United States, therefore, scores higher than the EU for

delegation, due to the strong dispute settlement mechanisms.36 However, United States

agreements contain a significantly weaker level of obligation and precision in their climate

change provisions than do those of the EU. There appears to be a trade-off between these

provisions, as states rarely score high on all dimensions.

To summarize, the degree of legal commitment to climate change provisions in PTAs

varies across our three metrics. Although most agreements have at least one provision that

scores high on obligation, the majority of climate provisions lack high levels of both

precision and delegation. Different countries also favor different forms of legalization.

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Whereas the EU favors higher levels of precision and obligation in its PTA climate

provisions, the United States is weaker on those metrics but higher on delegation. Overall,

this suggests that while the level of legalization of PTAs’ climate provisions is relatively

weak, it is becoming stronger over time.

Replication

Most PTAs’ environmental provisions are not tailored for a specific trade partnership. Rather,

they are reproduced from their earlier agreements verbatim (or nearly so), and sometimes

from third-country agreements.37 We refer to this process as “replication.” In this section, we

examine the extent to which climate-related provisions were replicated. The reproduction of

these provisions is important in evaluating PTAs’ contribution to climate governance because

it indicates how widely adopted a particular governance innovation has become.

Eighty-six percent of the 688 PTAs we examined include at least one provision

relating to the environment. Thirty-two percent of these PTAs (or 222 agreements) include at

least one provision addressing a specific environmental issue, such as biodiversity,

desertification, hazardous waste, forestry, or ozone depletion. However, only 14 percent of

PTAs (or 98 agreements) have incorporated provisions that address issues related to climate

change. Although climate change provisions have recently become more common in PTAs,

replication of these provisions within the trade system remains limited. Only 52 percent of all

PTAs signed between 2010 and 2015 include a provision on climate change. These results

highlight that, although several countries are increasingly willing to include detailed

environmental provisions in their PTAs, some still avoid addressing climate change directly.

To better assess the replication of climate change provisions within the trade regime,

we compare PTA provisions on climate with those on biodiversity. The climate change and

biodiversity regimes share a number of important features allowing for their comparison:

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they are two prominent global environmental regimes with significant environmental, social,

and economic implications; both regimes have wide scope and cover several more specific

issues, as evidenced by the proliferation of transnational and international instruments

addressing these issues; the core treaties of these regimes, the UNFCCC and the Convention

on Biological Diversity (CBD), were both adopted in 1992; North/South politics structure

central normative debates in both regimes; the United States has opposed some key

instruments of both regimes; and finally, both are trade-related but not trade-focused. Based

on these similarities, we might expect that roughly as many PTAs would refer to climate

change as to biodiversity.

Despite these similarities, our dataset reveals that far fewer PTAs address climate

change than biodiversity (Figure 8.1). 38 Moreover, the gap between the number of provisions

on climate change and those on biodiversity grows over time. Between 1990 and 1995, 11.7

percent included at least one climate change provision while 17.5 percent of agreements

included at least one biodiversity provision. More recently, between 2010 and 2015, the

percentage of agreements that include at least one climate change provision reached 54.8

percent. For the same period, 74.2 percent of PTAs included at least one provision on

biodiversity. Despite a remarkable rate of replication for environmental provisions across the

trade regime, the scope of replication for climate provisions remains smaller than that of

biodiversity provisions.

Figure 8.1: Number of PTAs with at least one provision addressing the issue area

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To evaluate the replication of climate provisions relative to other environmental

issues, we also compared the frequency of references to MEAs in PTAs across issue areas.

PTAs refer to MEAs for various reasons, including requiring parties to ratify or implement

the MEA. In addition to the UNFCCC and the Kyoto Protocol, we look at the Vienna

Convention (1981) and its Montreal Protocol (1987), the Convention on Biological Diversity

(1992) and its two protocols (Cartagena, 2000 and Nagoya, 2010), and the Basel Convention

on hazardous wastes (1989). We calculated the percentage of PTAs that refer to each MEA

since its conclusion. This means that older agreements are evaluated on the basis of a larger

sample of PTAs. The UNFCCC and the Kyoto Protocol are clearly underrepresented in

comparison to other MEAs, as less than 3 percent of PTAs adopted since 1992 refer to them.

Evidently, the climate change regime is lagging behind other MEAs in terms of the extent to

which related provisions are replicated across multiple PTAs.

We have demonstrated that climate-related provisions are among the least replicated

of all environmental provisions in PTAs. We support this finding by evaluating both the raw

number of PTAs that reference climate change relative to other environmental issues, and the

number of PTAs that reference climate change MEAs relative to MEAs in other issue areas.

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Distribution

The distribution of PTAs’ climate change provisions is also important to consider. It is more

important that states critical to the success of the climate change regime (i.e. the largest

emitters) sign PTAs with climate provisions than it is how many PTAs in total have included

climate provisions. Indeed, one argument for including climate provisions in PTAs is

precisely that climate change leaders can use their trade leverage to convince laggard or

ambivalent countries. Unfortunately, we find that it is rarely the case.

The distribution of climate change provisions remains concentrated around Europe.

The EU was the first to explicitly use the term “climate change” in a PTA, in its agreements

with Hungary and Poland on December 16, 1991, before the international community even

concluded the UNFCCC. Moreover, until 2004, the EU was alone in explicitly referring to

climate change in its PTAs.39 Today, 38 percent of all European PTAs address climate

change, and 100 percent of EU PTAs signed since 2008 contain climate provisions. The 50 or

so EU trade agreements concluded since the adoption of the UNFCCC in 1992 contain an

average of 2.6 climate provisions, and many of the most recent EU agreements contain more

than seven such provisions. By comparison, PTAs signed throughout the world since 1992,

excluding European agreements, have an average of 0.2 provisions on climate change. Figure

8.2 shows EU leadership on climate change governance through trade agreements in

comparison to other major emitters, including the United States and Japan. Not only does the

EU more frequently include climate provisions in its PTAs, but it also includes a wider

variety of climate provisions.

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Figure 8.2: Percentage of PTAs that include provisions on climate change since 1992

We also conducted a network analysis to determine the distribution of climate

provisions across countries. The EU’s central position clearly emerges from the constellation

of agreements it has established with its trading partners. The network grew mainly around

European influence and remains focused around the EU. That is, the EU is the most central

actor, whether measured by degree centrality, closeness centrality, or betweenness

centrality.40 We also see that the EU is struggling to export its model beyond its immediate

trading partners. Only a small section of the network seems to have developed independently

of EU influence. A number of Pacific Basin countries, in particular, have played a role in the

dissemination of climate provisions, and some of their respective partners have gone on to

reproduce these provisions in their subsequent agreements. Nevertheless, their influence

remains marginal compared with the EU.

Unfortunately, many other major actors within the climate change regime have not

followed the EU’s lead. Nearly 50 countries have not addressed climate change in any of

0%10%20%30%40%50%60%70%80%

Adaptation to climatechange

Cooperation on climatechange

Reduction ofgreenhouse gas

emissions

Promotion of renewableenergy

Promotion of energyefficiency

Reference to KyotoProtocol

Reference to UNFCCC

E.U. U.S. Japan

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their PTAs. Among these countries are some of the most significant GHG emitters and oil

producers, such as Saudi Arabia, Brazil, Venezuela, and Iran. Additionally, several major

emitters only incorporate weak and few climate change provisions into their PTAs. Neither

the United States, India, China, nor Canada include a significant number of climate change

provisions in their PTAs signed since 1992 (their respective averages of 0.6, 0.3, 0.4, and 0.8

compare to the EU’s 2.6). The United States includes a number of climate-related provisions

in its recent PTAs (especially on renewable energy and energy efficiency), but explicitly

refers to climate change only once, in the 2004 United States-Australia Environmental side-

agreement. That provision lists 12 specific environmental issues for cooperation between the

United States and Australia, with “global climate change” among them. This lack of

emphasis on climate change is in stark contrast to the attention the United States pays within

its PTAs to other environmental issues, such as forest protection and endangered species.41

To further assess the distribution of climate provisions in PTAs we compared the

average number of climate change provisions in each country’s PTAs with their level of

carbon dioxide emissions.42 The size of the bubbles in Figure 8.3 corresponds to the number

of PTAs signed by each country. As such, smaller bubbles deserve less attention and should

be interpreted with more caution than the larger ones. This analysis reveals that countries that

include more climate provisions in their PTAs tend to be low emitters. Moreover, this

relation is more significant for developed countries than for developing ones, with most

developed countries seeming to design PTAs that reflect only their short-term economic

interests regarding climate change.

Figure 8.3: Relation between carbon dioxide emission and PTAs’ climate provisions

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The relationship between climate provisions and vulnerability is slightly more

straightforward: highly vulnerable countries are more likely to include climate provisions in

their PTAs.43 The country with the most climate change provisions in its PTAs, Eritrea, ranks

as the second most vulnerable country to the impacts of climate change (after Somalia).

Conversely, countries with the lowest vulnerability indices, such as Norway, the United

States, and Canada, include fewer climate provisions in their PTAs. The EU appears as an

outlier, as it is less vulnerable to climate change while being one of the strongest proponents

of mitigation in its PTAs.

Figure 8.4: Relation between vulnerability to climate change and PTAs’ climate provisions

22

This section has demonstrated the limited distribution of climate change provisions in

PTAs. Although the EU is a clear leader on climate change governance through PTAs, other

major emitters are laggards, including only few and weak climate-related provisions. Finally,

vulnerable countries tend to incorporate more climate provisions than do countries less

vulnerable to climate change. But the very fact that some nations have included climate

change provisions in their PTAs demonstrate that this tool to promote action is available—

and could be expanded.

Conclusions

International efforts to mitigate climate change are no longer strictly limited to the UNFCCC

— the centerpiece of global efforts to combat climate change. Preferential trade agreements

have become an emerging space where countries are increasingly developing innovative

climate change solutions. PTAs can enhance global climate change governance in a number

of ways. First, the multitude of PTAs negotiated every year provides an opportunity for

23

policy experimentation. Second, unlike the Paris Agreement on climate change, PTAs can be

armed with sanction-based dispute settlement mechanisms. As such, they offer a possibility

for enhanced enforcement should states fail to fulfill their climate change commitments.

Finally, as demonstrated by the ambitious environmental norms included in some PTAs in

the realm of biodiversity conservation, PTAs can serve as a key avenue to go beyond the

targets set forth in the Paris Agreement and enhance the global climate change agenda.

PTAs have provided an exceptional contribution to the climate change regime through

novel climate provisions on issues ranging from renewable energy to climate change

adaptation. Nonetheless, PTAs remain weak in terms of legalization, replication, and

distribution. The legalizations of climate provisions are weak due to their lack of precision

and weak dispute settlement mechanisms. Replication of climate provisions is also limited in

comparison to other environmental issues. Finally, with the exception of the EU, distribution

is also weak, with limited uptake among large GHG emitters (including China and the United

States) and among countries that are not highly vulnerable to climate change. Clearly, PTAs

could better address climate change if countries strengthened their efforts measured by these

metrics.

The 2018 Comprehensive and Progressive Transpacific Partnership (CPTPP) is a

good example of a missed opportunity in this regard. Despite containing a multitude of

environmental provisions, even after the 2018 U.S. withdrawal from the CPTPP’s

predecessor (i.e. the TPP), the remaining 11 countries maintained weakly legalized climate-

related provisions. The CPTPP merely requires parties to cooperate on issues related to a

“transition to a low emissions and resilient economy.”44 It is possible that this carefully

worded language is structured so as to make a U.S. reentry into the agreement in the future

more likely. The recently agreed Canada-EU Comprehensive and Economic Trade

Agreement (CETA) contains similarly weak climate provisions. It only requires that parties

24

“pay special attention to” removal of trade barriers on climate change mitigation technologies

and that they cooperate on climate change issues.45 Although inclusion of climate change

policy in these PTAs at all is important, these weakly legalized provisions suggest countries

should see these PTA provisions as a floor for the potential contributions PTAs can have in

this area.

In addition, countries can use many other approaches to better address climate change

through trade agreements. An aggressive approach might entail countries more fully

integrating climate change policies into PTAs in similar ways to how the United States

integrated forest management issues into its PTA with Peru.46 This approach should be used

with caution; deep prescription into the domestic policies of other countries can lead to

unintended consequences, including cookie cutter policies that don’t fit within variable

domestic contexts, or the abuse of power to push PTA environmental policies through,

without adequate attention to core issues of democratic participation.47

A more moderate approach might involve linking PTAs to energy issues in efforts to

decarbonize through trade incentives.48 Indeed, this trend is increasing with many states now

promoting renewable energy and energy efficiency through subsidies or other protectionist

measures such as border tax adjustments. Ultimately, politics will mediate these decisions,

which must necessarily evolve in parallel to ongoing international climate change

negotiations and retreating multilateralism in some important countries.

Notes

25

1 Jean Frédéric Morin, Joost Pauwelyn, and James Hollway, “Trade Regime as a

Complex Adaptive System: Innovation and diffusion of environmental norms in trade

agreements,” Journal of International Economic Law 20, no.2 (2017): 365.

2 Sikina Jinnah, “Strategic linkages: The evolving role of trade agreements in global

environmental governance,” The Journal of Environment & Development 20, no. 2 (2011):

191.

3 Jean-Frédéric Morin and Mathilde Gauquelin, “Trade Agreements as Vectors for the

Nagoya Protocol’s Implementation,” CIGI Papers no. 115, Centre for International

Governance Innovation, 2016,

https://www.cigionline.org/sites/default/files/documents/Paper%20no.115.pdf.

4 Morin, Pauwelyn, and Hollaway, “Trade Regime as a Complex Adaptive System,” 365;

Sikina Jinnah and Abby Lindsay, “Diffusion Through Issue Linkage: Environmental norms

in US trade agreements,” Global Environmental Politics 16, no. 3 (2016): 41.

5 There is great variation across PTAs in this regard. (Axel F. Marx, Nicholas Hachez, and

Jan Wouters, Dispute Settlement in the Trade and Sustainable Development Chapters of EU

Trade Agreements (Leuven: Leuven Centre for Global Governance Studies, 2017)). However,

the fact that recent U.S. agreements include environmental provisions under the general dispute

settlement suggests the potential for broader replication of such provisions to other PTAs. In

contrast, the Paris Agreement and Kyoto Protocol both defer to the UNFCCC Article 14 for

resolution of any disputes. This article 14 is largely limited to conciliation, and in some limited

circumstances, deferment to the International Court of Justice; Jinnah and Lindsay, “Diffusion

Through Issue Linkage,” 41.

6 OECD, Environment and Regional Trade Agreements (Paris: OECD, 2007); John

Whalley, “What Role for Trade in a Post‐2012 Global Climate Policy Regime,” The World

Economy 34, no. 11 (2011): 1844; Rafael Leal-Arcas, Climate Change and International

26

Trade (Cheltenham: Edward Elgar Publishing, 2013); Markus Gehring, Marie-Claire

Cordonier Segger, Fabiano de Andrade Correa, Patrick Reynaud, Alexandra Harrington, and

Rodrigo Mella, “Climate Change and Sustainable Energy Measures in Regional Trade

Agreements,” Issue Paper no. 3 (Geneva, Switzerland: International Centre for Trade and

Sustainable Development, 2013), https://www.ictsd.org/downloads/2013/08/climate-change-

and-sustainable-energy-measures-in-regional-trade-agreements-rtas.pdf; Harro van Asselt,

“Climate Change and Trade Policy Interaction: Implication of regionalism,” OECD Trade

and Environment Working Papers 2017/03, OECD, 2017.

7 Our analysis assesses agreements signed before December 31, 2016. It does not include

the EU-Japan trade agreement, which is the first trade agreement to specifically refer to the

Paris Agreement; Jean Frédéric Morin, Andreas Dür, and Lisa Lechner, “Mapping the Trade

and Environment Nexus: Insights from a new dataset,” Global Environmental Politics 18, no.

1 (2018): 122.

8 TREND borrows its collection of trade agreements from the Design of Trade Agreement

(DESTA) Project. Andreas Dür, Leonardo Baccini, and Manfred Elsig, “The Design of

International Trade Agreements: Introducing a New Database,” Review of International

Organizations 9, no. 3 (2014): 353.

9 Todd Allee and Manfred Elsig, “Are the Contents of International Treaties Copied-and-

Pasted? Evidence from Preferential Trade Agreements,” Working Paper 8, World Trade

Institute, 2016, http://wp.peio.me/wp-

content/uploads/PEIO8/Allee,%20Elsig%2013.2.2015.pdf, 8.

10 Morin, Pauwelyn, and Hollaway, “Trade Regime as a Complex Adaptive System.”

11 “The Korea–Australia Free Trade Agreement (KAFTA),” Korea-Australia, Dec. 12,

2014

27

12 "Peru - Korea Free Trade Agreement (KPFTA),” Peru-Korea, Aug. 1, 2011,

http://www.sice.oas.org/TPD/PER_KOR/PER_KOR_Texts_e/PER_KOR_ToC_e.asp,

Art. 20.4.

13 Sikina Jinnah and Elisa Morgera, “Environmental Provisions in American and EU Free

Trade Agreements: a preliminary comparison and research agenda,” Review of European,

Comparative & International Environmental Law 22, no. 3 (2013): 324.

14 “The Korea–Australia Free Trade Agreement (KAFTA),” Korea-Australia.

15 “Trade, Development and Cooperation Agreement (TDCA),” EU-South Africa, Oct.

11, 1999, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Ar12201, Art.

84.

16 “EU-Central America Association Agreement,” EU-Central America, June 29, 2012,

http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147663.pdf, Art. 50.

17 “Implementation Agreement between the Government of Japan and the Government of

the Republic of Indonesia,” pursuant to Article 13 of the Agreement between Japan and the

Republic of Indonesia for an Economic Partnership, Japan-Indonesia, Art. 39.

18 EU-Georgia PTA, Article 231(c).

19 EU-Georgia PTA, Article 308.

20 Implementing Arrangement For Economic and Technical Cooperation Activities in

Agreed Areas Pursuant To Chapter 16 (Economic and Technical Cooperation) of The

Malaysia-Australia Free Trade Agreement, Malaysia-Australia, Sept. 22, 2014.

21 Peru - Korea Free Trade Agreement (KPFTA), art. 19.8.

22 Association Agreement between the European Union and the European Atomic Energy

Community and their Member States, of the one part, and the Republic of Moldova, of the

other part, EU-Moldova, June 2014, https://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:22014A0830%2801%29&from=EN, art. 93.

28

23 Costa Rica-China Free Trade Agreement, Costa Rica-China, April 8, 2010,

http://www.sice.oas.org/Trade/CRI_CHN_FTA/Texts_Apr2010_e/CRI_CHN_ToC__PDF_e.

asp, art. 123.

24 “The Korea–Australia Free Trade Agreement (KAFTA),” Korea-Australia.

25 EU-Montenegro Stabilisation and Association Agreement, EU-Montenegro, September

21, 2007,

http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2011566%202007%20INIT, art.

111.

26 “Trade Agreement between the European Union and Colombia and Peru,” EU-

Colombia-Peru, June 26, 2012,

http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147704.pdf, art. 270.4.

27 “Trade Agreement between the European Union and Colombia and Peru,” EU-

Colombia-Peru.

28 “Association Agreement between the European Union and the European Atomic

Energy Community and their Member States, of the one part, and Georgia, of the other part,”

June 27, 2014, https://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:22014A0830(02)&from=EN, Annex XXX to Chapter 6;

Association Agreement between the European Union and the European Atomic Energy

Community and their Member States, of the one part, and the Republic of Moldova, of the

other part, Annex XII to Chapter 17 of Title IV.

29 “Treaty of Lisbon,” EU member states, December 13, 2007, https://eur-

lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12007L%2FTXT, art. 188j.

30 Kenneth Abbott, Robert Keohane, Andrew Moravcsik, and Anne-Marie Slaughter,

“The Concept of Legalization,” International Organization 54, no. 3 (2000): 401.

31 Association Agreement between the European Union and Georgia, art. 307.

29

32 “The China-Korea Free Trade Agreement,” China-South Korea, 2015,

http://fta.mofcom.gov.cn/korea/annex/xdzw_en.pdf, art. 16.8 and 16.9.

33 Framework Agreements on Enhancing ASEAN Economic Cooperation, Indonesia-

Malaysia-Philippines-Singapore-Thailand, January 28, 1992, https://www.asean.org/wp-

content/uploads/images/2012/Economic/AFTA/Common_Effective_Preferential_Tariff/Fram

ework%20Agreements%20on%20Enhancing%20ASEAN%20Economic%20Cooperation%2

0.pdf, art. 2 (B) (3).

34 United States International Trade Commission, “U.S.-Korea Free Trade Agreement:

Passenger Vehicle Sector Update,” Investigation No. 332-523, USITC Publication 4220,

(March 2011), C-9.

35 Wybe Douma, “The Promotion of Sustainable Development Through EU Trade

Instruments,” European Business Law Review 28, no. 2 (2017): 193-212.

36 Jinnah and Morgera, “Environmental Provisions,” 331.

37 Allee and Elsig, “Contents of International Treaties,” 3.

38 For this comparison, we consider the eight categories of “climate related provisions.”

We considered as biodiversity provisions those related to endangered species, invasive species,

migratory species, protected areas, genetic resources, biosafety, and genetically modified

organisms.

39 We looked for various translations of “climate change” and “global warming.”

40 Degree centrality is based on the number of ties per node. Closeness centrality measures,

for each node, the distance to all other nodes. Betweenness centrality is based on the location

of a node in the path that links other nodes. As a central actor, the EU has the highest number

of PTAs with at least one climate provision (degree centrality), is connected to other countries

in this network by the fewest number of PTAs (closeness centrality), and appears as a step in

most paths connecting two other actors in this PTA network (betweenness centrality).

30

41 Jinnah, “Strategic Linkages.”

42 We used 2011 CO2 emissions per capita provided by the World Bank.

43 We evaluated vulnerability of a country to climate change according to the Notre-Dame

Global Adaptation Index.

44 “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),”

AUS-Brunei-CN-Chile-Japan-Malaysia-Mexico-NZ-Peru-Singapore-Vietnam, February 21,

2018, https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/20.-Environment-

Chapter.pdf, article 20.15.

45 Comprehensive Economic and Trade Agreement (CETA), Canada-EU, September 21,

2017, http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf, article 24.9.

46 Jinnah, “Strategic Linkages.”

47 Jinnah and Morin, “Trading the Environment.”

48 Rafael Leal-Arcas, “Trade Redemption: How Trade Agreements Can Help

Decarbonize the Economy,” Research Paper No. 271/2018, Queen Mary University of

London, School of Law Legal Studies, (2018).